Stimulus funds boost construction spending

| June 15, 2010 |

Construction spending rose to $869 billion between March and April this year thanks to stimulus funds, according to an Associated General Contractors of America (AGC) analysis of the Census Bureau’s latest spending figures. Total construction spending rose by 2.7 percent, or $23 billion, over the month according to Census Bureau data released June 1, 2010.

Public construction spending increased 2.4 percent to $303.3 billion in April, and public nonresidential construction rose by 2.3 percent to $294 billion.

Private construction rose 2.9 percent since March to $565 billion, and private nonresidential construction increased 1.7 percent to $302 billion between March and April.

AGC chief economist Ken Simonson says public construction’s monthly success is mainly due to funding from the stimulus bill.

“The stimulus is clearly driving one of the biggest increases in construction spending the industry has experienced in a long time,” says Simonson.

According to Recovery.gov, of the $37.5 billion in stimulus funds available for the Department of Transportation, $11.91 billion has been paid out. According to its most recent stimulus report, the U.S. Government Accountability Office (GAO) expects transportation, community development, energy, and environment projects to characterize stimulus spending this year.

Increases in stimulus-funded contracts for transportation and highway projects boosted spending numbers for the public transportation sector. Public transportation construction spending climbed 29.1 percent to $30 billion since April 2009 while private transportation construction spending dropped 10.7 percent to $8 billion over the year.

While he recognized the impact of the stimulus bill on public construction, Simonson says the industry isn’t out of the woods yet.

“Once you look beyond the stimulus,” Simonson says, “these figures show how uneven and fragile the construction industry remains.”

Private nonresidential spending declined 24.6 percent since April 2009, and the only sector to experience an increase since last year was the power sector, which saw a 1.4 percent rise in spending from $77 billion in April 2009 to $78 billion in April 2010. Spending increased over the month in communication (7.3 percent to $18 billion), manufacturing (2.7 percent to $57 billion) and power (5.2 percent).

“Assuming the economy continues to expand, privately-funded construction should experience a rebound starting in 2011,” Simonson says. “But for now stimulus funding remains the main source of support for nonresidential contractors.”